Hindustan Aeronautics Limited (HAL) shares jumped 3% today, reaching a day’s high of Rs 4,787.70 on the BSE. The surge follows reports that the company is expected to secure a new order worth Rs 67,000 crore for additional Tejas light combat aircraft from the Indian Air Force.
HAL set to receive another LCA Order
Hindustan Aeronautics Limited (HAL) is on track to receive a substantial new order from the Indian Air Force (IAF) for 97 additional Tejas light combat aircraft (LCA Mk-1A). The contract, estimated at Rs 67,000 crore, is expected to be finalized by the end of the year. This would represent the second significant order for the LCA Mk-1A, following the Rs 48,000 crore contract for 83 aircraft signed in February 2021.
The LCA Mk-1A is a key element of the IAF’s modernization strategy, aimed at enhancing its fighter fleet with domestically developed technology. Reports suggest that this new order underscores the IAF’s commitment to boosting its operational capabilities with indigenous aircraft. However, the development comes amidst concerns about HAL’s capacity to meet the delivery timelines for the LCA Mk-1As currently on order.
Brokerages On HAL
Jefferies on HAL
Jefferies has issued a ‘buy’ recommendation for Hindustan Aeronautics Limited (HAL), setting a target price of Rs 5,725 per share. The brokerage highlights that HAL’s Q1 revenue exceeded expectations by 3%. However, EBITDA was lower as margins contracted by 440 basis points to 22.8%. A notable factor in the profit beat was a 27% year-on-year decrease in depreciation.
Jefferies is optimistic about HAL’s future, citing a strong order book that provides confidence in achieving double-digit growth over the next 3-5 years. Despite current margin volatility, the brokerage expects margins to improve in the second half of the year with enhanced revenue delivery.
UBS on HAL
UBS has initiated a ‘buy’ call on Hindustan Aeronautics Limited (HAL), setting a target price of Rs 5,700 per share. According to UBS, HAL’s Q1 performance was operationally in line with expectations and is poised for robust ordering momentum.
The brokerage anticipates HAL will secure orders totaling Rs 1 lakh crore in FY25, with major contracts expected for LCH Prachand, 240AL31 engines, and SU30 upgrades.
UBS projects that HAL will be awarded approximately Rs 2 lakh crore in orders over the FY25-26 period, reinforcing a positive outlook for the company’s future growth.
CLSA on HAL
CLSA has reaffirmed its ‘outperform’ rating on Hindustan Aeronautics Limited (HAL) with a target price of Rs 4,731 per share. According to CLSA, HAL’s pipeline remains intact, but Q1 performance showed weakness in large engine orders, which have been deferred to Q2 and the remainder to H2FY25.
In Q1FY25, EBITDA declined by 6%, while PAT increased by 14% year-on-year. The slowdown in orders is attributed to delays in Russia-linked programs, which are now expected to impact the second quarter of FY25.
HAL Stock’s Performance in Last One Year
Hindustan Aeronautics shares have demonstrated positive returns across multiple time frames. Over the past three months, the stock has given a commendable 2.72% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 53.62%, indicating a strong upward trend.
Year-to-date, Hindustan Aeronautics shares have surged by 67.34%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 142.60% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.